theu.s.economyinthefourthquarte of. the u.s. economy in the fourth quarter of last year october, november, december contracted by 0. 1%. one-tenth of 1%. it was the first contraction in three years and it rattles financial markets. much of the slippage in gross domestic product, was due to what the u.s. federal reserves describes as quote weather related disruptions and other transitory facts unquote. the central bank is keeping monetary policy on hold. and says n worth of long-term securities a month, until there is a substantial improvement in the outlook for the labor market. also, the cut back in department of defense outlays, is likely to fuel concerns about the size of a slow down and the full economic fallout of the large quote unquote sequester cuts scheduled for a month from now,

the start of march. the president's press secretary said this about the sequester. quote, across-the-board cuts to education, to research and development, would have repeat, would have, damaging effects on our economy and our long-term economic prospects. unquote. a growing number of analysts believe the political will to stop the sequester is lacking. it will take effect, at least temporarily, they believe, and that will pose a further the f of this year. question. the fed is saying that the fourth quarter contraction october, november, december of 2012 was due chiefly to quote unquote transitory factors. is this true? or is the recovery stalling out pat buchanan? >> i think basically it is true, john. the u.s. economy is out of the intensive care it was in, in

2007-2008 but it has been walking the hospital halls ever since. the growth has been growing at an average of about 2%, unemployment is where it was when barack obama took office, we are adding about 150,000 jobs a month, but john, the real problem here is this slow growing is occurring when we have had five straight trillion dollars worth of defense deficits to pump it up and we get $85 billion a month in transfusions a month from the fed and we are still limping along like a mature and quite frankly modest economy. >> eleanor? >> i think these numbers reflect the fact that government is shrinking and the defense department really pulled back in the last quarter of last year. it is a cautionary sign and looks like both parties are kind of sleepwalking their way toward a sequester. the ropes don't want to -- the republicans don't want to give up anything on the revenue side they would rather take a hit in

spending. the democrats have protect social security, pell grants and medicaid, so they are not going to cave first. so if neither party blinks, the sequester will go ahead and we'll see further contraction in the economy. but you know, i'm not that glammy. i take my cue are from mark sandy, an accomplished economist. he says in 2013 we are going to go along with steady, modest growth but the housing market is truly come back and 2014 looks like. tell mark the consumer confidence dropped from 58.6% to 58.6%. >> they want their payroll tax cut. >> declined december to january. >> they want the payroll tax cut, no wonder. >> the big picture job numbers that came out try were encouraging but even business experts were looking at the big

picture and seeing the economy in job growth has been sluggish and terribly sluggish for a really long time. still hovering around 8% up employment. when is this going to end? no one sees it ending soon. that is bad news overall. what do you think mort? >> i think the she remains weak -- economy remains weak. as pat was saying. $25 billion a week in terms of deficit spending trying to boost up the economy. secondly, $85 billion a month, coming out of the federal reserve, the loosest monetary policy we have ever had. we can barely get the economy to grow. it was 2.4% last year, then 1.8%, if that, maybe even less this year. despite all the stimulus. so the economy is continuing slow, it is not even staying flat. >> so you are saying we are in for several quarters of low growth? >> we hope it is going to be several quarters of low growth. anything can happen in an

economy this fragile that can turn it into a recession i don't that would be a double dip recession. >> that's right. it would be. >> is that your prediction? >> no i don't know. >> i know you don't know. where do you think the odds are? >> i think the economy is going to stay very weak and any single event the collapse of the spanish banking system or what have you, any single event will create such a lack of confidence in the economy you'll have a big cut back. >> in what the federal review is saying in view of 2011, should i review that history with you? >> by all means. >> recently released fed minutes show how wrong the fed was in 2011 about the depth of the crisis. they could easily be wrong now in which case we are entering a double dip recession. >> i think there is at least a 50-50 chance we are going to end up with a double dip recession. one quarter maybe two of decline in gdp. >> i wish i had a nickel for every time you projected a double dip recession on this

show over the last two years. it hasn't occurred. >> maybe it is keeping it away. >> like carrying an umbrella when it is not raining. i got it. thanks. here is what we are experiencing a contraction or something longer lasting and more serious pat yes or no? >> we are in something of a contraction. we just went through it. i think we are in a permanent period of growth at about 2% or something like that. the old die namism we used to get it is not coming back. >> the fed is $85 billion a month, 3 trillion added in,. >> reading that in. >> five straight trillion dollar deficits and we are at 2%. >> you are plunging me into deeper depression. >> i have a lot more confidence in american ingenuity. before the internet came on the scene, pat had gloom and doom

then. something will happen. >> what do you think and why? >> we are sort of keeping toward a decline as pat was saying. we are not in a double dip recession. but we are so vulnerable it would only take one big event to knock us into that. the real unemployment rate supposedly around 11% if you use people who need a job not just those participate. >> real number. where is consumer confidence? >> it has dropped and one of the reasons is there has been a huge evaporation of wealth for the average american family. their single largest asset was their home equity. that is down 40 to 50%. a lot of people are being let out. no increases in wages. >> payroll taxes have gone up. >> have tax rates generally gone up? >> only down? >> exports are weak but they

have held unreasonableably. >> we are much better off than europe. it is a worldwide slow down, we are actually doing pretty dam well. >> trade balance will be an all issue two. heat over hagel. commander in chief barack obama has nominated charles chuck hagel for secretary of defense. hagel testified before the senate armed services committed tee this week. is senator john mccain grilling hagel about hagel's opposition to the surge in iraq in 2007. >> were you correct in your judgment. >> i would defer that to history. >> when you were right or wrong about the surge. >> i'll explain why i played those comments. >> i want to know if you were right or wrong. that is a direct question. i expect a direct answer. >> senator hagel explained he

opposed the surge in iraq because it cost nearly 1200 american lives. >> i saw the consequences and the suffering and the horror of war. so i did question a surge. i always ask the question, is this going to be worth the sacrifice? because there will be sacrifice. >> that was hagel's emphasis on the cost factor. my question is this. his emphasis on the cost factor in military decisions, does it serve as a dodge to senator mccain's bullet? or did he mean this completely from the heart? and if he did, isn't he exactly the man we want over at the department of defense? >> he was talking about the cost of lives. >> that's correct. >> and i think in that exchange that you showed, john mccain indicated how personal the surge is for him. he wants us to forget what folly the invasion of iraq and concentrate on what he considers the success i don't how do you know that? are you divining that about

mccain or did you see evidence of that? >> i am listening to him. he wants it to be all about the surge. senator hagel is correctly recalling what a disaster the invasion of iraq was and he is not going to defend one element of the tactic the surge, which allowed us to get out with our heads some what held high. >> the surge, john, saved the united states from a disastrous defeat in 2006. i supported the surge. but hagel is right in this sense. the surge saved us from a defeat in a war we should have never fought. we attacked iraq why? to deprive it of weapons it did not have. we invaded occupied, the war was a disaster and the worst of blundersers since vietnam. was mccain really trying to find out how the judgment of this candidate to be secretary of defense works and has worked and when he has the judgment to have this so important job where you are sending people in to lose their lives potentially? >> you want the secretary of

defense to want to defend our country. that is what we were doing over in iraq. that is what the surge was about too you'll ultimately and it was deemed a success and mccain said to hagel you are on the wrong side of history on this one. i think mccain is right on that point regardless of when we got in the war legitimately or not. hagel's overall problem wasn't just that exchange, by the end of the day people had almost forgotten about that because he had stumbled and really frownedderred throughout that hearing over even basic questions about the military. one.he did tell,. >> like what? >> our stance on containment in iran. >> what did he say about that? >> he talked about it containment versus prevention. >> obama's policy is to prevent and we will not adopt a policy to contain. >> at one point he said if i am cleared ask i become the next secretary of defense i will learn and know a lot more about this. that is not what you want

to hear. you want them to know already you want some sense of expertise about the job and real desire for it. i didn't sense that. >> can't he be. >> on the job? >> no his judgment not whether or not he has command of the data like buchanan every week what does that mean? >> you compare had are him with john kerry's hearing. democrat, liberal. >> . >> well susan is right to the extent he came across as someone who has not played at this level of the game for the last several years, he has been teaching at georgetown. but i think his overall posture on all these issues is right in line with the president's. and he is not going to be creating policy he is going to be carrying out. and his job was not to appear the smartest one in the room, it was to get nominated. he didn't take the bait, give them a headline. he is going to get confirmed.

>> i disagree. i think he did give them a headline. >> i don't want to characterize it or prejudice your judgment as though i could do that. but there was some talk about hagel being have really antisemitic. what was that? >> i don't know about that. >> brett stephens of the wall street gorm. i hope i have that man right. >> you have him right. >> you kind of suggested that by reason of what? >> well i think there have been a whole host of statements by the incoming secretary of defense that were perceived as being hostile to israel. >> talking about he says the jewish what lobby? >> that's right. >> and that is supposed to be a bad way to characterize ap.e. c? >> he said it prompted the congress to do a lot of stupid

things. somebody said tell us what stupid things we did. >> let me tell you how he cleared this charge, if that is what it is, this rap. charles shumer, did what? he showed him around. he escorted him. and charles shumer and he met, hagel met, before that happened. >> that's right. >> now you know charles shumer. >> i do very well. >> charles shumer would he function as negating anything about the antisemitic business and that phony rap? >> pat is already laughing because he knows i have a difficult time here. >> he is a critic of israel and a critic of his israelis. >> shumer is the deputy leader of the democrats in the senate. this is his job okay? >> his endorsement matters. >> you want to tell me something we don't know about what shumer

thinks about hagel? >> no i have never talked to shumer about. >> assume soldier convinced he is not antisemitic. >> i don't think shumer would have escorted him the way he did. >> exactly. i'm shocked, shocked, shocked, to find out that language by people who aren't totally sincere. >> shumer does not believe the man is antisemitic. he is a critic of israel, he used the wrong term when he called it the jewish lobby. >> i'm settling this for the group. >> not chuck shumer, chuck hagel. chuck hagel will be confirmed by the united states senate. >> absolutely. >> no doubt? >> even you? >> i would say 70%. >> wait a minute. wait a minute. >> i think there is a doubt. he may need five republicans to clear. >> i don't think they will filibuster. >> that suggests. >> i like him. >> he had a rough hearing john. >> he had a rough hearing. >> he is not preparing for the

hearings. >> he did not do as well as i hope he did and i'm a shumer guy. excuse me, i'm a hagel >> updat >> to the extent that. >> on this issue have been turned upside down. for the first time ever, there is more political risk in opposing immigration reform than in supporting it. >> there was a mighty political push this week. for changing u.s. immigration law with a bipartisan group of senators dubbed the gang of eight. on monday proposing a major overhaul. along with democrat chuck shumer, new york, the senate plan is backed by democrats robert menendez, new jersey, dick durbin, illinois, michael bennett, colorado, republicans john mccain arizona, marco rubio, florida, lindsey graham, south carolina, jeff flake,

arizona. details. first, beef-up border security. more agents, more drones. two. entry exit system to track visas of temporary visitors to make sure they exit. then for the 11 million illegal immigrants already here, a change to get quote up quote probationary legal status. that is if they come forward and successfully one, pass background checks, two, pay fines and owe taxes, three, learn english and u.s. civics. these temporarily legal citizens can then apply for full citizenship. there are also new fines and penalties against employers who knowingly hire illegal workers. five years ago in 2007, republicans defeated a similar plan but john mccain says this time may be different. the hispanic vote is need and

republicans don't have it. >> you look at the demographics of this country and the rising hispanic population, we are not going to win races. times have changed. americans have changed. elections have changed. and i'm not saying it is going to be easy and i'm not saying we are going to succeed this time but i think the chances are better than they have ever been. president obama is also determined to see major immigration reform. >> we need congress to ac on a comprehensive approach that timely deals with the 11 millimmigrants who are in the country right now. >> question. how likely is it that immigration reform will pass this year? we have one question and one answer each. pat buchanan? the path to citizenship in my judgment is going to fail. it will be stopped in the house and i think marco rubio will be badly hurt damaged, because i think there will be a rising. >> the path to citizenship will not.

>> it will pass the senate probably with 70% votes. the house is problematic for the very reasons pat outlined. republicans don't like giving the undocumented immigrants a path to citizenship. if they block that the democrats have a hell of an issue going into 2014 midterm elections. >> i never thought you would use that language in public that way. hell uva. only a weakened version because of an amnesty issue. maybe he'll sell it in the senate. even there, there may be problems but you get to the house and you have a big faction of folks that report going to tolerate that kind of thing. i know, i have talked to them. >> you remember how rubio gave a terrific speech and never once had to use the word amnesty. we don't have to use that word. >> it isn't amnesty. >> it is amnesty. it is amnesty to a people who will be voting on it in the house. >> you don't have to use that designation.

>> yes, i do. >> i believe the bill will pass both the senate and the house particularly with pat's support. >> i agree the edge. -- egypt on the edge. (speaking a foreign language). >> state of emergency. that's what egypt's president morsi announced this week. plus a curfew to curtail violent protests that have been raised in several egyptian cities. 54 people have died. another warning came from the country's army chief, that's egypt's -- that's egypt's political problems are pushing the near anarchy along the sues canal. in cairo a mob ransacked the fire star intercontinental hotel. it has been two years since

mubarak was september from power. the new -- was swept from power. the new present morsi is an islamist aligned with the brotherhood. adding to the unrest is egypt's weak economy. egypt's credit rating was downgraded from a b plus to a b. it cited instability. the urgency of egypt's climate brought leaders of all political stripes in a rare meeting tuesday. included were the muslim brotherhood. the shroff if is and secular and bib brail faxes, including mohammed el bar day and his national front. the group issued a statement calling for national dialogue, one that quote all the components of the egyptian society participate without any exclusion, unquote. as quote the only means to

resolve any problems or disagreements unquote. >> question. has egyptian president morsi overplayed his hand mort? >> he is certainly at the border lynn of overplaying his hand. he is losing a lot of support. the country is in terrible shape economically. even more extreme in the country are opposed to him. he has lost the center he has real problems in maintaining his position. i don't think the egyptian army has yet made clear where they will come out on all this because that is going to be the determining factor in who comes out ahead. he only survives if the army stays with him. pat? >> the muslim brotherhood is losing support and the hard right muslims are getting together with the ta heir square gang, and the military guys have said look we are in real danger of having a collapse of the state. that is why i agree the united

states should maintain its lines to the egyptian military, send them the jets, because they may wind up as the guys on top as the primary country in the arab world. >> what about the role egypt played in the breakout of the palestinians. >> in the gaza war? >> and morsi's role there in gaza? eleanor, you want to address that? >> well i think morsi has had some good moments on the international stage. but, he has frozen out the secular minority in egypt, and they, combined with the far right islamists are making his rule rather untenable. they are losing civil order in the country. the army is still alive and well and basically, they are the governing authority. >> we send israel, or egypt ÷p÷p

do you think that is a good idea? >> we need to stay alive with egypt i think. rather than leave this vacuum, where a radical foe could step in, we want to keep egypt an ally. >> when they send those jets to the egyptian army they the keystone pipeline will be approved by president obama yes or no? >> yes they coved it. >> i agree the state department will give the go ahead. >> yes, absolutely. and the mclaughlin group joins me and remembering and saluting ed koch, former mayor of new york an occasional panelist on the group. our thoughts and prayers are with his loved ones may ed rest in peace. bye bye

president obama urges seizing this moment to overhaul our nation's immigration laws. >> now is the time to find a better way to welcome the striving, hopeful immigrants who still see america as the land of opportunity. >> what does this mean for california? from the central valley to silicon valley? and san francisco implements a controversial law.

it enables court-ordered treatment for mentally ill patients at risk of becoming violent. >> these folks are a danger to themselves and to others. plus, the 49ers gear up for the super bowl. a report from new orleans. coming up next. good evening. i'm viviana ritado. welcome to "this week in northern california." what happens or doesn't happen in washington on immigration this year will have a big impact here in california.